SC Audit: Lottery-Funded Scholarships Need Review

Little Oversight on More than $220 Million Distributed to Community and Technical College Students

COLUMBIA, S.C. (AP) — South Carolina’s college oversight agencies do not verify that students who receive more than $220 million in lottery-funded scholarships are eligible for them, according to a legislative audit. The Legislative Audit Council recommends that the agencies review the lottery money it distributes to colleges and technical schools statewide.

The Commission on Higher Education distributes most of that money — nearly $173 million in 2012-13. The agency formerly audited its distributions, but stopped after the 2008 recessionera budget cuts. Agency officials say they agree with the recommendation. The agency is seeking $85,000 in the next budget to hire an auditor to renew the practice, according to its 2015-16 budget request.

The State Board for Technical and Comprehensive Education distributes lottery-funded tuition assistance to the state’s 16 technical and community colleges, which tallied $51 million in 2012- 13. Internal audits of that money also stopped with 2008 layoffs, said spokeswoman Kelly Steinhilper.

But the agency is taking a new approach, reviewing colleges where there are large year-to-year increases or decreases in assistance. A review has begun for three colleges where the swing was more than 10 percent, Steinhilper said.

Perry Simpson, director of the Legislative Audit Council, called that a good idea.

Large swings in distribution could signal “that something is not quite right,” Simpson said.

It’s unclear how much these reviews could catch or did catch in the past.

The audit notes that the Tuition Grants Commission, which awards needs-based grants to students attending private colleges, pays an independent auditor to perform annual reviews, using a sampling of students. If a student incorrectly received a grant, the college must refund the money. The audit does not detail how much the reviews have caught. But it does say corrective actions against colleges increase with subsequent findings, up to a one-year suspension from the program. According to the commission, no college has been suspended.

Voters approved the creation of South Carolina’s lottery in 2000. The first tickets were sold in January 2002.

According to the audit, last year’s state budget allocated $309 million in lottery revenue. Of that, $222.5 million went toward college scholarships and grants. Colleges received an additional $40.5 million of the lottery money, mostly for maintenance and technology. The state Department of Education received $44 million, mostly for programs in kindergarten through eighth grade, though other uses include $9 million for new school buses and $4 million for digital textbooks.

The remaining $2 million went toward renovation of a county library, technology at the School for the Deaf and the Blind, and gambling treatment services.

Lottery-funded college aid includes Life, Palmetto Fellows, and Hope scholarships, tuition assistance, need-based grants, and a program specifically for National Guard members. But that $222.5 million in lottery revenue didn’t cover all eligible students. Legislators allocated an additional $120 million from the state’s tax revenue.